Tuesday, July 17, 2007

Today was the big day. Dow 14,000 was crossed (we won't mention that the broader S&P 500 index actually fell on the day). I'm not sure what repelled the market away from this level. Your guess is as good as mine.

Of course, television pundits were completely obsessed with the Big Round Number. If and when we actually close above 14,000, it will be about 3 seconds before someone writes an article entitled, "Next Stop: 15K!" Yawn.

I took a small bearish position on CME today. It seems we have a failed breakout here. Plus, all the elation over BOT is past us now.

Intel is one of the largest and earliest earnings reports for Q2. As of this writing, this stock is down nearly 5%, wiping out about $7 billion in shareholder value. As an aside, YHOO also just reported, and they are down about 2% right now.

74 comments:

Hang in there, Tim. Ignore the morons in the comments section. Most of them can't compose a well-rounded sentence. I always appreciate your posts and especially the charts, regardless of whether or not I agree with your opinion.

Since you permabears really need help, i'm gonna give ya a new trend i notice that can help ya make some mad money. Posted at stockpickr.com :

----'A ridiculous trend that seems to be working:When FastMoney connects with MadMoney and theyboth like a stock the same day or 1 day apart,the stock usually goes down short term. Be itFCX, COP or YUM. The question is, did theyrecommend INTC at the same time?

Theory is that by the time the two groups ofgurus connect it probably means the stock hasrun up alot already and the euphoria is bakedin.

I want to be wrong so i don't use this trendanymore. Good luck.'-----

Turns out, INTC was recommended by both shows nomore than 1 day apart! lol

Hey Tim,One up for us bears! INTC, Yahoo drop off cliff after hours! SEMI lead TECH lead (well maybe not lead but at least drag them up) market. So INTC tank=SEMI tank=Market tank... Maybe it will go up a bit more, but top is not far off in my opinion.

We're Knights of the Round Table,We dance when ere we're able,We do routines and chorus scenesWith footwork impeccable.We dine well here in Camelot,We eat ham and jam and spam a lot.We're Knights of the Round Table,Our show are formidable,But many times, we're given rhymesThat are quite unsingable.We're Opera mad in Camelot,We sing from the diaphragma looooooot.In war we're tough and able,Quite indefatigable,Between our quests we sequin vests,And impersonate Clark Gable.It's a busy life in Camelot,I have to push the pram a lot.

Shares of Bear Stearns Cos. -BSC- fell 2.4% to $136.50 after the brokerage firm told investors that the portfolio assets of two hedge funds that bet heavily on the market for risky home loans are almost worthless, people familiar with the matter told The Wall Street Journal.

The assets in Bear's more levered fund, the High-Grade Structured Credit Strategies Enhanced Leverage Fund, are worth virtually nothing, according to people familiar with the matter. The assets in the other larger, less-levered fund are worth roughly 9% of the value since the end of April, these people said.

The two funds have been in the spotlight for weeks after suffering heavy losses in the subprime market. Late last month, Bear helped stabilize the less-levered fund with a $1.6 billion secured loan- the enhanced fund began trying to unwind its remaining $1.1 billion in debt.

Well that was a fun free fall after market. SP found some support at prior high. Tomorrow bulls should try very hard to defend that. IF CPI not so good, and bulls can not get a grip, look out below... false break out lead to fast fall to bottom...

The fact that the DOW rises while other indices fall is largely due to the fact that the DOW is not a weighted index. That fact alone made me decide a long time ago to complely ignore that particular index!

It's perhaps useful as a kind of finger in the air. But personally I prefer hard rationality!

A 1:1 ABC up on the Dow which started in October, '05 finishes at 14,150. A small 1:1 ABC up which started Feb '07 finishes at 14,000. The largest, a quarterly ABC which started in mid 1982 finshes at 14,022. S&P's look close to being already finished, plus resistance at previous high in 2000 is right here. The Naz (specifically QQQQ which I follow) still have a small way to go. The longer this stretches, the worse it will be (i.e. great).

To be a motivated daily blogger offering many perspectives/insights is not easy to do. All perspectives on the market is valuable information to a trader. This is a game of probabilities and anything can happen at any moment. Tim's charts are excellent resources and he does a great job annotating them, free of charge. With that said all opinions are cheap to give...learn to use this info to your own benefit.

Also looking at SMH and INTC, if you include after hour trade into the daily chart of both symbols, they are very nasty. SMH formed a very long shooting star on good amount of volume. INTC is at the bottom support line of the rising wedge (top resistance line is from the high around May 23 to the high of these pass few day, around July 12). Let's see how it react tomorrow. If Intel can bounce again right off the support line, then we may get a extension of its bull live. But if it gap down and keep going down at open, then maybe SMH will follow it down.

Then finally I might see the 4 year cycle correction (10% to 15%) correction for the whole market that I'm looking for.

We are very extended on this bull run, I think the longer we extend the worst the correction going to be. So better to have it now then later!

'My pity for someone with the misfortune to live in a hole like Phoenix is so great "THAN" I have forgiveness in my heart for you.'

Well said AND well spelled... ' yourself '.See, even you can have the occasional minor spelling error.

Oh and Tim ,by the way,I have a question.

Has the Decennial pattern NOW been broken (?)...since appaerently it was not on Dec. 30, 2005 , when we were at 10780 on the INDU .(Remeber your:"THE DECENNIAL PATTERN IS BROKEN" headline for that date's blog ? )

You had a quote on that date's blog : "I'm looking forward to 2006 as a year when the market really starts to fall to pieces."And yes ,we were at 10780 on the INDU.

Oh well ,maybe today was the top for a while. I'm kind of hoping that myself. Talk at ya' later !

P.S. - I only spend a fraction of my time in Phoenix. I'm actually about 400 miles south of you right now in Newport Beach.Yea,it's way too hot there in the summer , but it's a great place to spend time in the winter.

"Tim, the bulls have more firepower than you and after the CPI tomorrow' we should rally big time."

OK, newequity. Thanks for letting us all know.

I also appreciate your clearing up my misperception that my little trading account can't overpower the entire market. This whole time, I thought I was controlling the whole game, and everyone else was just a pawn.

I just hear a lot of giddy snorting and hoofing from over fatted calves. Tim Thanks ! my account grew 3%+ today due to your shared observations.(rsh,bhi,mbi) The abovementioned knowitalls have yet to recomend a winning stock before it rises(except for the solar boy).I've yet to see Tim waste his time trying to time a top -mostly he finds stocks showing weakness or topiness and then he capitalizes.

Wow. What a difference one day can make in the bloggers sentiment. From "There's no top in sight, randomly point your finger at a list and buy, buy, buy" to "Freefall! Everyone go to cash. Sell your longs!". Of course, Newequity hangs tight. Respectable. Maybe my words will haunt you tonight, like yours did mine. It's gonna hurt! Seriousy though. Might want to consider going cash, short term anyway. Let's see if we break or bounce. I love trading! The only activity which rewards the quickest "bandwagon" jumpers!

The Dow should have major support @ 13,700 (2% below) and the SPX @ 1510 (2.5% below). Seems for now that playing these pullbacks on the short side is a loser's game. There are many that would like what you hold for a few percent less. Look for a blowout number on GOOG, AAPL, FFIV, and JNPR - I've been holding low-cost , slightly OTM calls on all - w/ the exception of AUG 600 GOOG's, which are going to quadruple if it gets any where near 600. If the BKX turns down tomorrow, it's time to go crazy w/ puts on anything with sub-prime exposure (been riding CFC down & if it drops another $2 it will complete an 18 month H&S formation (and yes, Tim, I ignored your advice, much as it seems you often do, and jumped on the ride down the right shoulder.

Tim, Keep it up man!(In case you perceived any snarkiness from my comments yesterday, I can tell you for sure that they're unfounded. I am straightforward, when I say I like hearing about your downside bets I mean it. Like I said, I eat fish all the time.)

you know what clinched my joining your site? when you put up those charts of the shanghai index with that Chinese dude smirking in the distance...LOL...or that crocs chart with those loafer at ever dip...LOL!! or that chick from the server ad...such quality!!!

The abovementioned knowitalls have yet to recomend a winning stock before it rises(except for the solar boy).

Oh, I dunno about that. I believe I agreed with Tim on his long MU call.

Vic(tor)resumes:

I've yet to see Tim waste his time trying to time a top -mostly he finds stocks showing weakness or topiness and then he capitalizes.

I guess we'd have to count you inobservant then, Vic. Either that, or you're not very clued into the securities Tim is trading.

Let me help out. When Tim posts about "RUT" puts, or "IWM" puts, or even "SPY" puts, those are index puts with which one is calling the direction of the market. In the case of a put, that would be calling the top of the current bull.

Fact is, Tim's calls have been relatively decent.

On the long side.

If he'd only promise to clamp on the tin foil hat whenever he feels an emination from the Ursa Major star cluster, we'd have one hellavu stock picking site here.

As a UK reader and being bullish, I find this blog is a valuable read to balance out the equation and provide thought and ideas...

At the end of the day everyone has there own opinion where the market is going, just opinions!! Yet I read every day stupid thoughtless remarks from fellow readers!

If you dont like or agree with what is written write a well thought out responce (or just not if you cant) rather than looking stupid and ignorant acting like you are 5 years old which you may well be.....

I started coming here to learn more about technical charting. In addition, I get good laughs from the humor that is thrown in for free!

Personally, I would like to see more discussion of charts and why people see something heading up, down or sideways along with what they are actually doing about what they see. That is what I enjoy most about the posts--you showing us what you see and then showing that you put your money where your mouth is, uh, Charts are.

It will be great when the new blogging software is up and you can 86 the snarkiness and other comments that are not technical charting in nature. Why do posters have to take out their venom on each other in this public forum? I'd like to be able to have my kids read this when I'm showing them what I'm learning, but alas, I'd rather not have them absorb any filth in the process...

I like to see where you draw you lines and compare what you do to what I want to do. Sometimes, I just don't get what you are driving at and can't bring myself to trade your charts. At other times, I adopt your suggestions.

Now when I can get my entries and exits down, I will start making some serious coin. Until then, at least my account value is holding and growing a little while learning.

Thanks for keeping it real AND please increase the number of charts.

From a Trader-in-Training that gets sucked by the market from time to time.

Every day, in every way, the market is becoming more and more bearish. When was the last time the S&P, DOW made new highs and the rank and file stock didn't follow? You'll have to go back years. Make no mistake you bullish fools, distribution is rearing it's ugly head right here. Tops take some time to form but the signs are unmistakable: there is a massive topping process going on here and now.

Tim,I apologize for trying to get you to trade sane investing principles. You know I'm right on this one if you are in fact an experienced trader. If you are a newbie then I can understand the irrational behavior. I don't think you are a newbie though. I can understand Winace's comments he hasn't been around long enough to have the error of his ways forced on him more than this once. Although it appears he's trying to make the same mistake again and lose that last 20%. You however should have enough experience to know that you are now on the path to blowing out your portfolio. I'm not saying this to be mean or to try and convert you to following the COT. I see you taking desperate measures that no rational experienced trader would take. If you are down to the wire and have no choice but to take a huge risk. Then for heavens sake you never ever take that kind of risk against the large secular trend or against the big money. The odds are stacked against you. It's like betting your whole wad on one number on the roulette wheel. You might get lucky but the risks are too great. Please reconsider what you are doing.

I saw CROX shoes at my Henry's. Just seeing those shoes made me laugh and think of your blog. I didn't see anyone checking out the exotic colors, which has spurred my interest in buying puts 3 months out. Keep up the good work!

Gary, how about you trade your way and let Tim trade his. You don't have to read his comments, you agitator. You think trading is about being right, or do you miss the basic element that it takes two sides to make a market. Leave you ego someplace other than here.

Fear,On the contrary making money is absolutely not about being right or wrong. It's about position sizing, finding an edge and having the discipline to trade that edge. Any experienced trader knows this. Tim included. Which is why I can't understand why he's doing what he's doing unless he's desperate.

I have put tim's positions into a spreadsheet and I can assure everyone he is not up 20% in the past few days unless of course he leveraged his account 10x to ^RUS puts this morning. He is just bs-ing along with the rest of the idiots on this board who constantly pump solar and everything moving up.

trendy, don't get your pantyhose in a bunch. Your flame is pointless here. As a matter of fact, pointless chatter from the likes of someone like yourself about a topic that you know nothing about is a waste of pixels.

Post your portfolio and trades or shut up and read because you have nothing of consequence to share.

Tim Knight founded Prophet.net, considered by Forbes and Barrons to be the #1 technical analysis site (sold in early 2005 to INVESTools, where he is the SVP of Technology now). Tim has been trading actively since 1987 and focuses mostly on option positions. He is a dyed-in-the-wool technician, leaning heavily on marked-up charts for his analysis. The contents of this blog are NOT to be considered investment advice, and you should know Tim may or may not have positions in the securities mentioned here.